When fortune no longer favors the brave
The global cryptocurrency market reached a value of US$ 1,782 billion in 2021.
Now 40% of all investments in cryptocurrencies are underwater. That's a lot of paper wealth that was incinerated.
Matt Damon doing a crypto ad. Jesus Christ does he not have enough money already pic.twitter.com/mS3tUgJ6HT
— Ken Klippenstein (@kenklippenstein) January 3, 2022
Unfortunately, it's not just wealthy speculators that are being hit hard. It's also hitting some of the poorest people on the planet.
El Salvador's president Nayib Bukele is a big Bitcoin enthusiast. However, his push into the cryptocurrency has left his country facing the spectre of default, a situation made worse by the famous digital currency's recent crash.
The current price of Bitcoin at $28,404 puts El Salvador's Bitcoin value at just over $65 million, but the country paid over $103 million for it in a series of purchases.
The drop of over $38 million is a fall of 37 percent.
The IMF executive board urged El Salvador to reverse track and remove Bitcoin's legal tender status, and expressed doubts about the plan for Bitcoin-backed bonds.
In response, in February credit rating agency Fitch downgraded El Salvador's long-term debt rating from 'B-' to 'CCC,' putting it in the category where "default is a real possibility."
El Salvador's president, instead of being discouraged, has doubled down and purchased even more bitcoins.
The problem plaguing cryptocurrencies is not limited to just crypto.
What we are witnessing is the implosions of all of the most extremely speculative investments. For instance, meme stocks.
That’s because all the meme stocks that rode the popular wave during the pandemic have taken major hits. The index of 37 meme stocks compiled by Bloomberg has reached a record low in the last few days, down 63% from its peak in January 2021...
As for another player in the meme stock game, the zero-commission broker Robinhood Markets, through which many meme investors placed their orders, its price action points to the ebbing of the craze. Robinhood peaked at $85 on Aug. 4, shortly after its initial public offering. Wednesday it fell to $8.15.
It's interesting that Robinhood, the instrument of the meme stock bubble, is crashing along with meme stocks.
It's similar to the crash in bitcoin is coinciding with the collapse in stablecoins Terra and Luna.
That collapse in crypto has fallen on the market that you buy with crypto - NFTs.
An NFT of the first tweet posted by Twitter co-founder Jack Dorsey (it read: “just setting up my twttr”) was sold to a Malaysian business executive for $2.9 million in March 2021. The owner put it up for sale last month, hoping to collect $50 million. The highest bid was less than $14,000.
The one consistency in all of this is FinTech. Where Silicon Valley meets Wall Street.
SPACs, or special-purpose acquisition companies—sometimes called blank-check firms—begin as shell companies. They raise money from investors, then list on a stock exchange. Their sole purpose is to hunt for a private company to merge with and take public while skirting some of the other regulations associated with IPOs.
Losses top 60% from the peak about a year ago for many once-hot names like the sports-betting company DraftKings Inc. and space-tourism firm Virgin Galactic Holdings Inc., founded by British billionaire Richard Branson.